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Milan Stock Exchange ends disastrous "black week"

08-08-2011 10:53 BJT

MILAN, August 5 (Xinhua) -- Milan Stock Exchange closed with heavy losses on Friday ending one of its worst-ever weeks amid worries about Italy's mounting public debt and low economic growth rate.

The main FTSE Mib stock market index closed Friday down 0.70 percent, hitting a new low at 16,015 points, following a wave of panic selling at the opening.

The spread or difference in yields on Italian 10-year government bonds and benchmark German bonds was 416 basis points earlier in the day, but it eased after a rumored intervention by the European Central Bank.

Yet, publication of blue-chip FTSE MIB index was temporarily halted for the second time in two days.

The suspension of the index took place around 10 minutes before the market close, an incident similar to the "technical glitch" that occurred on Thursday, when publication of the index was suspended 30 minutes before the close.

The major index dropped 5.16 percent on Thursday. The total loss of the week was up to 12.7 percent.

According to local analysts, investors are worried about the country's high level of public debt and low economic growth rate as well as a lack of structural reforms taken by the ruling center-right coalition led by Prime Minister Silvio Berlusconi.

Also, new data showed industrial production dropped 0.6 percent in June upsetting analysts' expectation of a 0.1 percent rise in the month.

On a 12-month comparison, industrial output was up 0.2 percent, far worse than a forecast rise of 1.7 percent.

Industrial production had also contracted 0.6 percent in May, when analysts had expected a rise of 0.1 percent.

Leading Italian newspapers said that after the latest economic and financial turmoils, the country, its economy, banks and citizens have been subjected to a suddenly stress test.

No real estate bubble has burst in Italy, and Italian banks, unlike their counterparts in other major developed economies, are not battling enormous sums of toxic investments. Meanwhile, Italy's unemployment rate of 9 percent is much lower than Spain' s 20 percent.

But analysts agree that the country is paying for a double weakness, the political one and the structural one.

"Italy is going through a financial storm. We all need to jointly work to implement structural reforms, which is the only way to save Italy," Roma-based "la Repubblica" newspaper wrote on Friday.

Speaking at a joint press conference after the bourse' s close on Friday, Berlusconi and Finance Minister Giulio Tremonti declared their aim at reaching a balanced budget and enhancing Italy's growth and development within 2013.

"We are thinking of four pillars of action, two for the public finance and two for the growth", Tremonti said.

Editor:Wang Xiaomei |Source: Xinhua

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